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China issues new Advertising Law – effective on 1 September 2015
BlogLimeGreen IP

On 24 April 2015, China passed the draft amendments to the Advertising Law. This amended Advertising Law (“Amended Law”) will come into effect on 1 September 2015. The Amended Law represents the first major revision of the law since the Advertising Law was first introduced in 1995 and will bring about significant changes to the regulatory regime for advertising activities in China.

We have been closely monitoring the status of the draft Amended Law and highlighted some of the key proposed changes in our previous article; “China Slaps Record Fine on False Advertising: Draft Advertising Law stimulus for tougher stance?“. Most of these proposed changes were adopted in the Amended Law. In addition, since the publication of our article, some further changes were made to the draft and implemented in the Amended Law. In this article, we summarize these additional changes.

Highlights of the Amended Law – (please also refer to the abovementioned article):

Prohibition of “misleading advertising”

The Amended Law broadens the definition of “false advertising” by expressly prohibiting both false and misleading advertising contents.

3-year ban for engaging endorsers who fall foul of the Amended Law

One major change to the Amended Law is that celebrities or other endorsers endorsing a product or service may be held liable if they know, or ought to know that the advertisement amounts to false advertising. In addition, the Amended Law imposes a ban on further engaging endorsers who were held liable of endorsing false advertising for a 3-year period.

The Amended Law prohibits the advertising of healthcare food, pharmaceutical products, medical equipment and the like under the disguise of “health information” programmes or columns on radio or TV stations, printed media or on the Internet.

The Amended Law also introduces a ban on advertisements on mass media and public premises for baby dairy products, drinks and other baby food which claim to serve as a substitute for breast milk.

Unsubscribe facility

In addition to the prohibition on sending advertisements to home addresses or in electronic format without the recipient’s consent or request, the Amended Law also requires that advertisements sent in electronic format must display the sender’s real identity and contact details, together with information about how the recipient can unsubscribe from further advertisements. Violations of these rules are punishable by a fine of up to RMB 30,000.

Increased enforcement powers

As we pointed out in our previous article, the sanctions under the Amended Law are wide-ranging. It is noteworthy that the Amended Law also provides that any entity or individual may report suspected false advertising activities to the AIC, which will be required under the law to handle the case and notify both parties within 7 working days. In addition, the China Consumers’ Association and other consumer protection organizations will also be empowered under the law to monitor false advertising activities which compromise consumer interests. The AIC will furthermore be required to keep records of false advertising activities and will have the power to publish them.

Conclusion

It is undeniable that the Amended Law sends out a signal that China is keen to strengthen consumer protection by clamping down on undesirable advertising activities. The Amended Law has a wide scope, and it is expected that further implementing measures or interpretations may be issued in the future to give further guidance on the application of the new law. In the meantime, it is advisable for brand owners to review their advertising practices in China to ensure compliance with the new law, especially in light of the potential surge of regulatory enforcement and consumer complaints. That said, false advertising is not solely about legal liabilities or monetary compensation; very often it is the reputational and publicity issues which really matter.

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